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1 in 2 companies lack a risk management strategy

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An international survey of more than 1,500 professionals conducted by DNV GL and the research institute GFK Eurisko shows that half of businesses lack a clear risk management strategy and only 43% set measurable risk control goals.

Mauro Crippa

All organizations face factors that make it uncertain whether they will reach their goals. Risks that are not identified and managed properly may have a negative effect on companies and cause human, material, financial or reputational damage. While it is utopian to think that all risk factors can be controlled, companies that have a structured approach to risk management are better able to navigate troubled waters.

Compliance-driven

The survey shows that companies which have implemented a risk management strategy are primarily driven by a need for compliance (71%), company policy (64%) and demands from customers (63%). Half of the companies (55%) were motivated by financial benefits.

In daily operations, risk management was practised by 37% of board members, 46% of the top management teams and 40% of middle management. Larger companies with more than 1,000 employees naturally have a stronger focus on risk management than smaller organizations, with 77% stating they have a dedicated risk management team.

Several risk management standards, guidelines and frameworks exist in order to support the implementation of best practices in an organization. However, the survey indicates a low level of familiarity with these in that only 1 in 3 companies (36%) use at least one standard, guideline or framework (even partially).

Growing focus

However, companies are increasingly focusing on risk management and several report that this will play a crucial role in their overall business strategy and performance going forward. Of the companies surveyed, 45% plan to increase their investment in risk management over the next three years.

Most respondents (81%) think that basing their management systems on a structured risk management approach will bring added value to the organization and its stakeholders.

Luca Crisciotti, CEO of DNV GL - Business Assurance, comments:

“Leading organizations not only regard risk management as a necessity to manage threats or ensure compliance with rules and regulations. By being integrated with their overall business strategy, a proper risk management approach also enables them to detect upside risk and take advantage of business opportunities.”